The “three T’s”—taxes, transactions & tariffs—will have a marked effect on mergers and acquisitions in 2026, speakers told the audience at the recent AMAA Winter Conference.
“Planning makes all the difference in the world, between some significant tax savings, or maybe the ability to save it all,” said Eric Heath, Managing Director at Bluejay Advisors.
Taxes have changed as the result of the passage of the One, Big, Beautiful Bill, which included a provision for the return of 100% of depreciation, increasing the attractiveness of asset purchases for borrowers, said Heath, who moderated the panel. This is a return to the rules that were in place in 2017, before the depreciation percentage was phased down.
Greg Wilder, founder of Wildflower Legacy and Wealth Planning, as well as a CPA and tax attorney, added that under the new rules, businesses can take certain steps to decrease their tax liability.
Aaron Kriss, Managing Partner at Gesmer Updegrove LLP, advised the audience to consult with a CPA before issuing S corporation shares, an action that has QSBS implications.
Reforms enacted over the last several years have reshaped cross-border M&A, according to Kevin Cunningham, Managing Director at KPMG, with a U.S. corporate base no longer the detriment vis-à-vis a foreign base that it once was.
In recent years, the U.S. has reduced corporate tax rates, enacted easier repatriation regimes and has authorized tighter anti-erosion rules. Additionally, a U.S. base now offer a simpler more sustainable approach for some private equity sponsors and buyers.
The constantly changing tariff scenario has made valuation more difficult, particularly in sectors such as transportation, in which they can have the most impact. Tariffs can increase costs and compress margins, pushing buyers toward contingent consideration structures.
Earnouts and other types of contingencies can help manage for the tariff uncertainties, according to Erbeznik. Earnouts and other contingencies have become increasingly common but are the most contentious element of any transaction. Most (90%) sellers expect to receive their full earnout, but far fewer (60%) do, primarily because of disputes over measurement, control, and post-closing decision-making.
“As a sell-side advisor, we try to create an environment where we don’t get earnouts, but generally our sellers have expectations they may raise above what the market will bear,” Heath said. Earnouts help fill this gap.
Kriss shared a “war story” of how a Mexican-based manufacturer had to negotiate the complexities of the tariffs, particularly those affecting Mexico and Venezuela. The bottom line is that uncertainty over tariffs is likely to continue for at least the next three to four years.
Anyone looking to sell a business should start as soon as possible, the panel agreed. Successful exit and tax planning takes time. It’s already too late to plan for a 2026 exit, Wilder said, so those planning to do so should look at 2027 and beyond.
By looking at least a couple of years ahead before an exit, sellers can prepare for restructuring, trust planning, incentive compensation cleanup, and valuation work, rather than scrambling to do so before an imminent transaction.
Early planning also will enable the seller to maximize value while minimizing tax implications for any future transaction.
